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Stocks rallied on Friday after Federal Reserve Chairman Jerome Powell said the central bank will be patient in raising rates, quelling fears of tighter monetary policy in the near future. The Dow Jones Industrial Average rose 700 as Boeing, UnitedHealth and 3M outperformed. The S&P 500 rallied 3.2 percent, with the tech sector gaining more than 4 percent. The Nasdaq Composite climbed 4.1 percent. “As always, there is no preset path for policy,” Powell said.

“And particularly with muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves.” Powell also said the central bank would not “hesitate” to change its balance-sheet reduction plan if it was causing problems. Fears that the Fed may be making a policy error by tightening too fast have contributed to the recent skittishness in financial markets, according to several market experts.

“I think he did what the market hoped he would do,” said Tom Essaye, founder of The Sevens Report. “What he did with these comments is he acknowledged that they need to be more flexible.” “This is worth a bounce, but at the same time, the major issues facing the market are not resolved. We have a potential earnings problem in this market; we have a potential economic growth problem in this market,” Essaye added. “Today’s rally is more a result of the overextended downside from yesterday.”

The U.S. gained 312,000 new jobs in December, capping off the biggest increase in hiring in three years and showing that second longest economic expansion in U.S. history still has plenty of staying power despite growing worries about a slowdown. The surge in hiring was the largest since February. Economists surveyed by MarketWatch had forecast a 182,000 increase. Hiring in November and October was also stronger than originally reported, the government said Friday. The unemployment rate, meanwhile, rose to 3.9% from a 49-year low of 3.7%. The percentage of working-age Americans in the labor force climbed to a one-and-a-half-year high as more people looked for jobs. That’s usually seen as a good sign since it means people think work is easier to find.

From rising wages to a slowdown in housing, economic evidence is mounting that the U.S. Federal Reserve is at or near a neutral level of interest rates where it can take stock of where the economy stands before deciding on its next moves, Cleveland Federal Reserve president Loretta Mester said on Friday. The comments from a usually hawkish reserve bank president, made in an interview on the sidelines of the American Economic Association annual meeting, add to the sense that the roughly quarterly pace of rate hikes enacted by the Fed for the past two years may take a pause this year absent a surprise jump in inflation or faster-than-expected economic growth.

“We are in a new world,” Mester said, where the obvious need to raise rates has given way to a situation where economic growth is expected to slow, wages are rising on the basis of low unemployment, interest rate sensitive sectors of the economy like housing have ebbed, and the unemployment rate has roughly “stabilized” at a low level. Taken together, Mester said, those are the sorts of developments one would expect in an economy where interest rates were near a neutral level that was neither encouraging nor holding back economic activity. “We really need to be looking at the data and having the economy tell us, do we need to move more? Do we need to move more, faster? Can we wait?” Mester said. “We should take our time and assess….We may be where we need to be.” Overall, she said she felt the Fed was in a “really good spot.”

The Fed started the QE unwind in October 2017. As I covered it on a monthly basis, my ruminations on how it would unwind part of the asset-price inflation and Bernanke’s “wealth effect” that had resulted from QE were frequently pooh-poohed. They said that the truly glacial pace of the QE unwind was too slow to make any difference; that QE had just been a “book-keeping entry,” and that therefore the QE unwind would also be just a book-keeping entry; that QE had never caused any kind of asset price inflation in the first place, and that therefore the QE unwind would not reverse that asset-price inflation, or whatever. But in October last year, when all kinds of markets started reversing this asset price inflation, suddenly, the QE unwind got blamed, and the Fed – particularly Fed Chairman Jerome Powell – has been put under intense pressure to cut it out. Yet it continues:

The Fed shed $28 billion in assets over the four weekly balance-sheet periods of December. This reduced the assets on its balance sheet to $4,058 billion, the lowest since January 08, 2014, according to the Fed’s balance sheet for the week ended January 3. Since the beginning of this “balance sheet normalization,” the Fed has now shed $402 billion. According to the Fed’s plan released when the QE unwind was introduced, the Fed is scheduled to shed “up to” $30 billion in Treasuries and “up to” $20 billion in MBS a month – now that the QE unwind has reached cruising speed – for a total of “up to” $50 billion a month. [..] Over the four weeks from December 6 through January 3, the Fed’s holdings of Treasury securities fell by $18 billion to $2,223 billion, the lowest since January 15, 2014. Since the beginning of the QE-Unwind, the Fed has shed $243 billion in Treasury securities:

US President Donald Trump has said he could declare a national emergency to build a US-Mexico border wall without the approval of Congress. It came after he met senior Democrats, who refused his requests for funding. The stand-off has seen Mr Trump withhold support for a bill to fully fund the government until he gets money for the border wall. He said he was prepared for the partial government shutdown – now in its third week – to last years. Around 800,000 federal workers have been without pay since 22 December. Trump aides and lawmakers will meet later on Saturday in a fresh bid to resolve the impasse.

The Republican president initially gave a positive account of the 90-minute meeting at the White House, describing it as “very productive”. But when asked whether he had considered using emergency presidential powers to bypass congressional approval of funding, Mr Trump said he had. “I may do it. We can call a national emergency and build it very quickly. That’s another way of doing it.” “I’m very proud of doing what I’m doing,” the president added. “I don’t call it a shutdown, I call it doing what you have to do for the benefit and safety of our country.” House Speaker Nancy Pelosi said Friday’s meeting had been “contentious”, while Senate Democratic leader Chuck Schumer said: “We told the president we needed the government open. He resisted.”

Trump on Twitter: “How do you impeach a president who has won perhaps the greatest election of all time, done nothing wrong (no Collusion with Russia, it was the Dems that Colluded), had the most successful first two years of any president, and is the most popular Republican in party history 93%?”

Robert Mueller has been given additional time to carry out his investigation into Russia’s alleged interference in the 2016 election, and possible collusion between Moscow and the Trump campaign. In a development that may surprise those who have suggested the special counsel’s work was drawing to a close, a judge in Washington DC granted a six-month extension to the grand jury being used to examine evidence. The jury had been impanelled in July 2017 for a standard 18-month term and was set to expire this week. The extension granted by federal judge Beryl Howell means the investigation will continue for some time yet. AP said federal criminal procedure rules allow such extensions when a judge determines it is in the public interest. The extension can only last up to six months.

Donald Trump has said China’s weakening economic growth puts the United States in a strong position as negotiators from the world’s two largest economies prepare for trade talks on Monday. US officials are heading to Beijing this weekend for the first face-to-face talks since Trump and China’s president, Xi Jinping, agreed in December to a 90-day truce in the trade war as they sought to strike a deal. “I think we will make a deal with China,” Trump told reporters at the White House after a meeting with Democratic and Republican lawmakers about the US government shutdown. “I really think they want to. I think they sort of have to.” Beijing on Friday cut bank reserve requirements for a fifth time this year amid slowing growth at home and the punishing US tariffs on exports.

“China’s not doing well now. And it puts us in a very strong position. We are doing very well,” Trump said. “I hope we’re going to make a deal with China. And if we don’t, they’re paying us tens of billions of dollars worth of tariffs – not the worst thing in the world.” [..] The president also downplayed the effects of the economic woes on Apple, which this week blamed slowing iPhone sales in China for a rare reduction in its quarterly sales forecast. When asked if he was concerned about Apple’s revenue cut and share price drop, Trump said: “No, I’m not. I mean look, they’ve gone up a lot.”

Shares of Apple rebounded on Friday after a 10% nosedive on Thursday on the revenue warning. The shares closed at $148.26 on Friday, down about 5.1% for the week. For the 2018 full year, Apple shares fell 7%, although they are up about 24% since Trump took office in January 2017. “They’re going to be fine. Apple is a great company,” Trump said, adding he had repeated his advice to Apple boss Tim Cook to build his company’s products in the United States. “Apple makes its product in China. China is the biggest beneficiary of Apple, more than us, because they build their product mostly in China,” Trump said. “I want Apple to make their iPhones and all of the great things that they make in the United States. And that’ll take place.”

China’s central bank said on Friday it was cutting the ratio of cash that banks must hold as reserves by 100 basis points (bps), or 1 percent, as it looks to reduce the risk of a sharper slowdown in the world’s second-biggest economy. The cut in banks’ reserve requirement ratios (RRR) is the first in 2019 and the fifth in a year by the People’s Bank of China (PBOC) as the economy faces its weakest growth since the global financial crisis and mounting pressure from U.S. tariffs. The reduction is being made in two equal stages, effective Jan. 15 and Jan. 25, the PBOC said. The reserve requirement ratios (RRRs) are currently 14.5 percent for large banks and 12.5 percent for smaller banks. Further cuts in the RRR had been widely expected this year, especially after a spate of weak data in recent months showed China’s economy was continuing to lose steam. The size of the move was on the upper end of market expectations.

Rep. Alexandria Ocasio-Cortez (D-NY) suggested in a “60 Minutes” interview scheduled to air Sunday that the highest-earning Americans may need to pay an income tax rate as high as 60 to 70 percent to combat carbon emissions, reports Politico. Speaking with Anderson Cooper in a “60 Minutes” interview scheduled to air Sunday, Ocasio-Cortez said a dramatic increase in taxes could support her “Green New Deal” goal of eliminating the use of fossil fuels within 12 years, a goal which even she acknowledges is ambitious. “What is the problem with trying to push our technological capacities to the furthest extent possible?” Ocasio-Cortez asked. “There’s an element where yeah, people are going to have to start paying their fair share in taxes.”

Ocasio-Cortez pointed out that in a progressive tax rate system, not all income for a high earner is taxed at such a high rate. Rather, rates increase on each additional level of income, with dramatic increases on especially high earnings, such as $10 million. -Politico [..] Ocasio-Cortez relished Anderson Cooper’s characterization of the tax plan as “radical,” before comparing herself to Abraham Lincoln and Franklin D. Roosevelt. “I think that it only has ever been radicals that have changed this country,” said Ocasio-Cortez. “Yeah, if that’s what radical means, call me a radical.”

Foreign ministers from 12 Latin American countries and Canada said Friday their governments would not accept Nicolas Maduro as Venezuela’s president when he is sworn in for a second six-year term next week. The 14-member Lima Group – with the exception of Mexico – said it would not grant recognition to Maduro’s hardline socialist government, after meeting in the Peruvian capital to discuss ways to step up international pressure on the regime, which has presided over the oil-rich country’s economic collapse. Peru’s Foreign Minister Nestor Popolizio said the group had delivered “a strong political message” ahead of Maduro’s inauguration on January 10.

Maduro was re-elected on May 20 in a ballot boycotted by the main opposition parties and widely condemned by the international community, including the United States which called it a “sham.” “The main message is undoubtedly the non-recognition of the Venezuelan regime’s new term,” Popolizio told reporters. “It is very important that the Lima Group has issued this statement to continue exerting pressure with a view to the restoration of democracy in Venezuela,” the Peruvian minister said. The Group, of which Canada is a member, said Maduro should temporarily transfer power to the opposition-controlled National Assembly until free elections can be held.

[..] Venezuela hit back at the Lima Group, accusing it of fomenting a coup at the behest of the US, which has sanctioned Venezuelan officials and entities. Caracas expressed its “great bewilderment at the extravagant declaration of a group of countries of the American continent which, after receiving instructions from the United States through a videoconference, have agreed to encourage a coup d’etat,” according to a statement read by Venezuela’s foreign minister, Jorge Arreaza. The United States, which is not a member of the group created after deadly anti-Maduro protests in 2017, participated in the meeting for the first time. Secretary of State Mike Pompeo commented by video conference from Washington.

Turkey needs to choose between the Lockheed Martin F-35 fighter jets it has ordered from the United States or the acquisition of the Russian S-400 missile system, Democratic Senator Chris Van Hollen told Kathimerini in a recent interview at Congress. Van Hollen warned that Turkey may be subject to US sanctions if it buys the Russian systems under the August 2018 Countering America’s Adversaries Through Sanctions Act (CAATSA), which penalizes governments that buy weapons from Moscow.

“I want to be clear that I am not opposed to the sale of F-35s to Turkey. The big problem I have is that Turkey is a NATO ally and they are saying that they are planning to proceed with the purchase of the Russian S-400 system,” he told Kathimerini. “So I am very much opposed to the F-35 sale going through if the Turks follow through on their plan to purchase the Russian air defense system. The reason is that it would compromise the security of the F-35s and potentially the security of all other NATO aircraft.” “In my view Turkey has a very simple choice. They can purchase the F-35s or they can purchase the S-400. But they can’t have both,” Van Hollen said.

Oh, those terrible right wingers. Look what they want, it’s f*cking anarchy: “The right wing hopes to transform the European elections into a kind of plebiscite: What kind of Europe do people want?” The Horror! The Horror!

Right-wing populists have become a feature in the political landscape of almost every European Union member state, while in Italy, Austria, Poland, Hungary, Slovakia, Denmark and Finland, they are either part of the government or support the government. They are no longer merely a fringe phenomenon or a passing anomaly. Rather, they are a movement that could continue to grow — and they are doing all they can to position themselves as such. Despite all of their differences, the target of their ire is the same: the cosmopolitan elite, liberal opinion leaders in the media and EU bureaucrats in Brussels. Their best enemies? German Chancellor Angela Merkel and French President Emmanuel Macron, the latter having proven to be a tireless promoter of deeper European integration.

From the perspective of the right wing, the plans pushed by Macron and his supporters can mean only one thing: Further impositions on “normal people,” upon whom much has already been imposed — things like smoking bans, gay marriages, refugees and expensive environmental protection regulations. The populists claim they are the only ones who speak for the majority of Europeans. And one of their primary goals is a Europe free of immigration. They call their concept the “Europe of Nations.” The right wing hopes to transform the European elections into a kind of plebiscite: What kind of Europe do people want? Open or closed? Traditionalist or tolerant? Should the European bloc become a political union with fewer powers reserved for the nation-states or should it merely be something like a free-trade area in which each individual country can chart its own course?

OMG! An avalanche of bullshit!
What to do; what to do?
Ignore the whole tranche and move on with your life as best you can.
You’re walking down a trail rife with danger; be on your best guard! Expect an ambush at every turn and act accordingly.
For those not so well equipped?
Hold your ground and do nothing; let the storm pass over and go from there…

Again, don’t watch the big daily moves – traders make money on volatility – but those are major breakdowns. If the whole price-structure sags, you reach non-negotiable margin calls as the entire economy is over-leveraged. Reversal of leverage is, as they say, “Up by the stairs, down by the elevator shaft”, and overshoots.

A jobs report that is more nonsense than the usual nonsense. Look at the long term workforce participation. But you have to have plausible cover for Mnuchin to pull the green lever 700 points and rock the little markets while attracting the world to “safety”, ie the US.

By neutral rates, he means he’s at the event horizon, which as the center nation, means everyone else has definitely been pushed over the cliff. If he raised more, people would realize this. So as we say in America “It’s not whether you win or lose, but where you place the blame.” As the world’s pre-emminate bullsh-tters, this is the real focus of affairs. Congress blames Trump. Trump blames the Fed. China blames America, and so on. And Macron blames the Russians.

The logic – such as there is any – was that the Fed buying assets ran the market up, but selling them will not run the market down. Gotcha. Remember Kudlow says there’s no Recession in sight. Subprime is contained.

They had this wall thing the day the Democrats said the President was Hitler, but then gave him a few extra ten billion for military and spy agencies anyway. Nice #Resistance. But where would the fun be in that? Much better to blame the other party and make political hay. And honestly, he did tell congress he would sign any immigration reform they put in from of him. They didn’t, same as the last 40 years. The Democratic House won’t either, although all the people they claim to love are dying because of it. And speaking of blasts from the past, there’s a video going around with every politician for the last 40 years speaking in favor of building a wall and controlling the border. Obama, Clinton, Pelosi, Schumer, and naturally McCain, Romney, etc. In fact Schumer voted $25 billion in favor of the wall already. –But that was under Obama. Now of course, $25 billion is madness, bigotry, and hate. Ah, such is politics, and the people love it. My side, right or wrong.

PS, still haven’t noticed the government shutdown. Maybe by Thanksgiving it will affect our lives somehow. But who knows, maybe the EPA will blow fewer containment ponds, fewer Quakers have been wiretapped, and fewer foreign journalists have been indicted for crimes outside U.S. jurisdiction.

Like I said, Mueller should have a lifetime appointment. He can investigate forever and ever and ever and hand the office down to his children and grandchildren, who can investigate Ivanka’s and Barron’s children and grandchildren. Sound good? Because if the President had even the slightest whiff of treason, Mueller could not, in any possible universe, wait to present evidence because the planet’s nuclear codes and the existence of the Republic would be at risk. No report = no evidence, unless Mueller is a traitor too. Not impossible, as apparently Russia runs all of France and the yellow vests, all of Britain and Brexit, the AfD in Germany, all the blacks in America (who in a great fit of racial equality Democrats say are poor, weak-minded children easily fooled by Russians), and probably everything everywhere else in the world. Why not Mueller? He probably saw a Facebook ad or something.

“in the 1950s and 60s those rates were as high as 90%.”

Yes, and they didn’t pay them then, either. They bought loopholes, crated shell trusts, and lodged money through corporations. Like Buffet, who still pays less than his secretary. If you’re “rich” almost by definition you can take “income” at will, not by necessity, because you don’t have a paycheck. Also she grew up in Westchester and thinks $10M is “rich”? $10M means you own a house. I don’t mind her saying it, she should do what she believes in, but a whiff of this talk pulled all the Billionaires out of France, and now they have nothing. NJ had ONE billionaire leave for Florida and it blew an unfillable hole in their budget. Think carefully. We never needed any of this before; maybe you’re spending too much?

So Latin America can overturn their neighbor’s elections now? Where will it end? Has anybody heard of that quaint notion of sovereignty anymore? You know, the one we’re mad at China for thinking of overturning? Why should they care if they overturn it, we’re not using Westphalia anyway.

He may be a dictator. But we’ve had dictators since day one, they were called “kings.” We may have some now, far from South America.

“US Senator: Turkey Must Choose Between US Jets and Russian Missiles (K.)”

That’s the easiest choice ever: an overpriced plane that can’t fly or the world’s best missile at half price. Senator Dumas may not like his answer.

Those mean right wingers, wanting democracy! How dare they? And I notice they did not have a problem with the immigration levels of the 90’s, putting a lie to the “no immigration” which if you asked anyone, anywhere, would be happy to tell this reporter. It just doesn’t sound appropriately biased when you say “legal immigration” with “rules for entry” and “peaceful integration with the culture” when you “stop bombing and interfering in foreign governments.”

Despite a “gloomy” picture in the stock market, Trump’s top economic advisor says a U.S. recession is not in the cards.
National Economic Council Director Larry Kudlow cites the better-than-expected jobs report, which showed the economy adding 312,000 jobs in December.
“There’s no recession in sight,” Kudlow tells Bloomberg television.

director of staff of 25 to coordinate the economic policy making process and provide economic policy advice to the President. The Council also ensures that economic policy decisions and programs are consistent with the President’s stated goals, and monitors the implementation of the President’s economic goals.

What are his outstanding qualification for the job.
Kudlow has been married three times:
former television host
Well connected name dropper
His advise is always wrong
Kudlow’s style is boldly assertive and his line of argument is always framed in expressions of optimism about the economy, the stock market, and the dollar.
a publicized battle with cocaine and alcohol addiction,
His family is Jewish.
In 1970, he was still a Democrat,

Well, people will start to notice the shutdown if it is still going on when they want to file their tax returns. The IRS only has 10 – 12% of its staff working (without pay), and those are the ones who are responsible for the internal IRS security.

They haven’t finalized the tax forms for 2018, are not answering the phone lines, even the taxpayer help lines, and will not issue refunds during the shutdown.

Not that anyone would get a refund since the damn forms aren’t finished yet. Companies like Turbotax will do their best for early filers, but will have to hold the returns in electronic limbo until 1) the forms are finalized and the returns can be checked against them, and 2) the IRS is open again and accepting returns.